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KapStone has big bucks riding on 'biomass' decision

LONGVIEW, Washington (From The Daily News) -- KapStone wants its wood waste boilers to earn cash. And the Longview mill's "biomass" facility could be a moneymaker if Gov. Jay Inslee approves a bill that has cleared the Legislature.

State Sen. Dean Takko, a Longview Democrat, said Inslee will sign the measure on Monday.

The bill would allow older biomass facilities like the one owned by KapStone to sell renewable energy credits. KapStone stands to earn hundreds of thousands of dollars annually under the legislation.

Inslee vetoed a similar bill last year out of a concern that biomass energy could undercut the competitiveness of other renewable energies, such as wind and solar. This year's bill is narrower in scope. Sponsored by Takko, the bill passed the Senate unanimously and glided through the House, 91-7.

Burning wood waste is considered a carbon-neutral form of energy because the wood on its own would eventually decay and release stored-up carbon dioxide, a greenhouse gas. So biomass is considered renewable energy that does not add to global climate change.

The bill comes at a time when demand for renewable energy is poised to expand. Utilities across Washington must comply with the latest round of standards in voter-approved Initiative 937. Currently, electrical utilities with more than 25,000 customers must get 9 percent of their power from renewable sources, but the percentage must increase to 15 percent in three years.

Instead of building their own renewable energy facilities, utilities can also purchase renewable energy credits to meet those standards. KapStone and other pulp mills across the state want to be among the sellers of such credits.

Under current state law, only mills with biomass facilities constructed after 1999 can sell renewable energy credits. This now excludes KapStone, which has boilers and furnaces dating back to the 1950s and 1960s. Takko's bill would amend the law so that any facility that made significant upgrades to biomass plants after Jan. 1, 2010, could sell renewable energy credits.

KapStone has argued that it should be recognized for the major upgrades it has made at its Longview biomass facilities since 2007. These improvements enabled KapStone to boost biomass energy production to 25 megawatts -- enough to power about 16,000 homes. That's up from 15 megawatts originally.

This year's bill would only give KapStone credit for 13 megawatts of power, about 10 megawatts less than last year's version of the bill. Under current market conditions, 13 megawatts' worth of renewable energy credits could sell for $225,000 to $800,000 annually, according to estimates from the Cowlitz PUD. However, the price of renewable energy credits varies widely and could change.

Environmental groups appear to be more neutral about this year's version of the bill since the changes have been made.

Expanding the definition of renewable energy could help mills and utilities comply with the increased renewable energy standards under I-937, said Chris McCabe, Executive Director of Northwest Pulp and Paper Association.

"Our members have been making significant capital investments to upgrade their boilers and other technology to make them as energy efficient as possible," McCabe said in a press release.

Proponents argue the bill will encourage other companies to make investments into upgrading their biomass facilities, too.

"KapStone is proud of the investments it has made in its energy infrastructure and its efforts toward being more energy efficient," said Mike Roberts, KapStone energy manager, in a press release. "The governor would be giving a nice environmental and economic boost to rural Washington by signing this bill, especially here in Cowlitz County which is so heavily invested in natural resources."


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